As Option Panda operates in a decentralized environment, it pools real underlying asset as collateral to guarantee option underwriting. Option sellers’ only way to participate is by depositing a specific asset to either a Call/Put underwriting pool to join a pooled option underwriting for that very asset; option buyers could purchase a call/put option with any stable coin(initially only USDT is supported). This is unconventional compared to traditional option market, where buyers/sellers offer their bid/ask prices for a certain strike price and expiry date respectively. Option Panda’s underwriting pool generates and retires options regularly. To avoid concentration and liquidity risk of the underwriting pool, Option Panda evenly allocate the pool’s available funds across options with different expiry dates and sets up a utilization ratio upper bound of 75% for the pool, which means that at most 75% of the pool could be utilized for option underwriting. Concerning settlement, Option Panda employs a combination of cash settlement and physical delivery of profit to option buyers(Option profit will be settled in cash but delivered in underlying physical asset). Five available expiry durations, 5 minutes, 15 minutes, 30 minutes, 45 minutes and 1 hour, will be offered at Option Panda’s initial launch.